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Author Topic: [XMR] rpietila Monero Economics thread  (Read 69388 times)
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rpietila
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July 20, 2014, 11:55:17 AM
 #1

Dear sirs,

The thread is intended for analytical discussion on Monero distribution and other economics. Please do not use it for chat. There are other threads about Monero, for cross reference they will be listed here when brought to my attention.

Many thanks to cAPSLOCK for taking the responsibility to update the Monero Community Hall of Fame thread, which leaves my time available for these analyses.

Originally my intention was to buy only as much XMR as I hold BTC. (The XMR:BTC ratio of 1:1, which means that no matter which one goes to zero, as long as the other one captures all its value, you don't lose or gain anything). Then after realizing that I spend about as much time thinking about Monero than I think about Bitcoin, the 0.3% holding did not seem justified any more. Either I should stop thinking about XMR (did not work - try it!) or buy more of it. A lot more Wink

After hearing that many are positioning such that they hold 100:1 (XMR:BTC), which is about 25% in XMR, or even 400:1, which is more than half in XMR, I also set myself up to acquire a larger position. That was a contributing factor in the rise last week but I am not even nearly done. It just does not feel right to sell XMR to receive BTC when you are already as loaded with BTC as I am. All the other coins are shitcoins, so not worth buying. The expectation that others realize Monero's beauty after me, is just a repetition of how bitcoin started rising when I had already positioned myself.

Next post will be all about Monero's coin distribution between holdings of different size. I went deeper than with BTC, and the results are interesting Smiley

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July 20, 2014, 12:48:48 PM
Last edit: July 20, 2014, 02:00:41 PM by rpietila
 #2

It is always good to see how you rank compared to others in owning a coin. But how?

With Monero, the blockchain provides no help in determining balances. So the distribution of holdings must be constructed purely theoretically. What we use in the analysis of this post is just the following information:

- Number of XMR (about 2.2 million when this was done);
- Assumption that the distribution follows power law for the highest 3% of the holders (it does if we are talking about general wealth) - the power law distribution has the property that the owners of 100-200 coins collectively own the same number of coins as the ones owning 200-400 coins etc. But their number is 2x higher (because the other group was 2x richer), and the density is 4x more (because not only there was 2x the number of people, but also the bracket is in absolute terms only half the size);
- Below that, the distribution forms a nice bulge centered around the median holding and drops quickly towards insignificant holdings;

I have calculated 2 possibilities that give the result for both 5,200 and 13,200 holders. The results are presented in logarithmic brackets that are 0.333 log10 units wide (unlike my usual precision of 1 log unit, this gives 3 times more information). The exact form of the very top (holdings of the top-5 or so holders) affects the distribution somewhat, but with XMR it cannot be deduced either directly or statistically. I have assumed that the Case A scenario has a large outlier but Case B does not have it.


Case A - 5,200 holders:

Code:
min max avg #ppl tot.xmr
17 280 000 1 280 000
16 100 000 - 215 443 142 600 1 171 034
15 46 416 - 100 000 66 189 3 171 034
14 21 544 - 46 416 30 722 6 171 034
13 10 000 - 21 544 14 260 12 171 034
12 4 642 - 10 000 6 619 26 171 034
11 2 154 - 4 642 3 072 56 171 034
10 1 000 - 2 154 1 426 120 171 034
9 464 - 1 000 662 300 198 468
8 215 - 464 307 750 230 301
7 100 - 215 143 1 349 192 413
6 46 - 100 66 1 349 89 310
5 22 - 46 31 750 23 030
4 10 - 22 14 300 4 276
3 5 - 10 7 120 794
2 2 - 5 3 36 111
1 1 - 2 1 11 15

Largest holdings:
1. 280,000 XMR
2. 147,000 XMR
3. 80,000 XMR
4. 65,000 XMR
5. 50,000 XMR

top holding:  280,000 XMR
top 10:  22,500 XMR
top 100:  2,200   XMR
top 1000:  285 XMR
      
# of holders: 5,188   
avg holding:  427 XMR
==  1.92 BTC
==  1,211   USD
median holding: 100 XMR   
half of the coins belong to 43 people


Case B - 13,200 holders:

Code:
min max avg #ppl tot.xmr
17
16 100 000 - 215 443 142 600 1,2 165 745
15 46 416 - 100 000 66 189 2,5 165 745
14 21 544 - 46 416 30 722 5,4 165 745
13 10 000 - 21 544 14 260 12 165 745
12 4 642 - 10 000 6 619 25 165 745
11 2 154 - 4 642 3 072 54 165 745
10 1 000 - 2 154 1 426 116 165 745
9 464 - 1 000 662 291 192 329
8 215 - 464 307 726 223 179
7 100 - 215 143 1 816 258 976
6 46 - 100 66 3 632 240 412
5 22 - 46 31 3 632 111 589
4 10 - 22 14 1 816 25 898
3 4,6 - 10,0 6,6 726 4 808
2 2,2 - 4,6 3,1 291 893
1 1,0 - 2,2 1,4 87 124

Largest holdings:
1. 137,000 XMR
2. 80,000 XMR
3. 65,000 XMR
4. 50,000 XMR

top holding:  137,000 XMR
top 10:  20,500 XMR
top 100:  2,150   XMR
top 1000:  270 XMR
      
# of holders: 13,234   
avg holding:  167 XMR
==  0.75 BTC
==  473   USD
median holding: 46 XMR   
half of the coins belong to 150 people.
rpietila
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July 20, 2014, 12:52:40 PM
 #3

There are already 2 Economics threads, why do we need a third one?

Be kind and list all the Monero threads with links and short introduction as to why I/anyone should be following them in your next post or stop cluttering this one! Smiley

(Which is the reason altcoin threads are a pain to read)
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July 20, 2014, 01:02:08 PM
 #4

There are already 2 Economics threads, why do we need a third one?

Be kind and list all the Monero threads with links and short introduction as to why I/anyone should be following them in your next post or stop cluttering this one! Smiley

(Which is the reason altcoin threads are a pain to read)

https://bitcointalk.org/index.php?topic=597878

https://bitcointalk.org/index.php?topic=622708.0

Go check the official Monero thread and then have a look at the sister threads

And why should people follow your thread instead?
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July 20, 2014, 01:06:21 PM
 #5


- Assumption that the distribution follows power law for the highest 3% of the holders (it does if we are talking about general wealth) - the power law distribution has the property that the owners of 100-200 coins collectively own the same number of coins as the ones owning 200-400 coins etc. But their number is 2x higher (because the other group was 2x richer), and the density is 4x more (because not only there was 2x the number of people, but also the bracket is in absolute terms only half the size);


i dont know if this assumption is right, because nobody knows how much others are holding.
have you something to read for me about the power law?

transfer 3 onemorebtc.k1024.de 1
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July 20, 2014, 01:17:53 PM
 #6

Go check the official Monero thread and then have a look at the sister threads

And why should people follow your thread instead?

Don't be so aggressive - if you followed those threads yourself, you would have seen me there many times Wink

(I am not compelling anyone to follow my threads, people do it voluntarily!)
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July 20, 2014, 01:26:28 PM
 #7

@rpietila

Yes, have seen you many times there. But you seem to be trying to control the Monero economy by opening new moderated threads where you control who talks what

I have nothing against anyone, but deep down looks like rpietila is trying to pump Monero
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July 20, 2014, 01:27:47 PM
 #8

Reminder for everyone: on top of OP of each "officially sanctionned" sister thread, there is a banner linking to other threads.

Soon, a Monero subforum will be necessary Smiley

Monero: the first crytocurrency to bring bank secrecy and net neutrality to the blockchain.HyperStake: pushing the limits of staking.
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rpietila
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July 20, 2014, 01:31:10 PM
 #9


- Assumption that the distribution follows power law for the highest 3% of the holders (it does if we are talking about general wealth) - the power law distribution has the property that the owners of 100-200 coins collectively own the same number of coins as the ones owning 200-400 coins etc. But their number is 2x higher (because the other group was 2x richer), and the density is 4x more (because not only there was 2x the number of people, but also the bracket is in absolute terms only half the size);


i dont know if this assumption is right, because nobody knows how much others are holding.
have you something to read for me about the power law?

When talking about wealth distribution in general, it has been found that the wealth of the highest 3% conforms to the power law, so that there are 1/2 the number of people that are twice as rich, until at the top there is a single person.

In the world this holds true until we get to the 10-billionaires. There the trail ends, even though according to the power law, 100 times richer people should exist. It is most plausible that they have hidden the wealth.

If the number of people went to less than half when doubling the wealth, most of the wealth would belong to average people.

If the number of people were more than half when doubling the wealth, most of the wealth would belong to the ultra-rich.

Wikipedia:"power law"

For it to be realistic to apply power law to coin holdings, we need to assume that there has been enough time and liquidity for everyone to balance their holdings to exactly the amount that they wish. I think this assumption is realistic, since the exchanges have been available almost since the beginning, and there has been lots of liquidity and price action there.

What is more difficult for me to estimate is the number of holders. But as long as the power law distribution in the higher end holds true, even doubling the number of users has no large effect on the top, as evidenced by the example distributions.
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July 20, 2014, 01:34:24 PM
 #10

Yes, have seen you many times there. But you seem to be trying to control the Monero economy by opening new moderated threads where you control who talks what

I have nothing against anyone, but deep down looks like rpietila is trying to pump Monero

1. I know what place in Monero holdings I am most likely occupying. And the ones above me are not economists, so it is only my responsibility to speak out concerning topics that I find interesting and beneficial.

2. It is true that since I own only BTC and Monero, these are the only two coins I have incentive to pump. I know it is hard to swallow for shitcoiners  Cheesy
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July 20, 2014, 01:45:53 PM
 #11

Reminder for everyone: on top of OP of each "officially sanctionned" sister thread, there is a banner linking to other threads.

Soon, a Monero subforum will be necessary Smiley

The banner looks nice, but like the intruder said, I would like to keep this one a little personal to me, like I have had several threads before.

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July 20, 2014, 01:57:07 PM
 #12

Yes, have seen you many times there. But you seem to be trying to control the Monero economy by opening new moderated threads where you control who talks what

I have nothing against anyone, but deep down looks like rpietila is trying to pump Monero

1. I know what place in Monero holdings I am most likely occupying. And the ones above me are not economists, so it is only my responsibility to speak out concerning topics that I find interesting and beneficial.

2. It is true that since I own only BTC and Monero, these are the only two coins I have incentive to pump. I know it is hard to swallow for shitcoiners  Cheesy

Not all of the altcoins that you dont own are shit, even though most of 'em are.
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July 20, 2014, 01:58:41 PM
 #13

Code:
100 000 - 215 443 142 600 1 165 745
46 416 - 100 000 66 189 3 165 745
21 544 - 46 416 30 722 5 165 745
10 000 - 21 544 14 260 12 165 745
4 642 - 10 000 6 619 25 165 745
2 154 - 4 642 3 072 54 165 745
1 000 - 2 154 1 426 116 165 745
464 - 1 000 662 291 192 329
215 - 464 307 726 223 179
100 - 215 143 1 816 258 976
46 - 100 66 3 632 240 412
22 - 46 31 3 632 111 589
10 - 22 14 1 816 25 898
5 - 10 7 726 4 808
2 - 5 3 291 893
1 - 2 1 87 124
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July 20, 2014, 02:11:44 PM
 #14

So, what the Monero economics thread will tell us about fall in price. Uh?
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July 20, 2014, 02:21:35 PM
 #15

Case B - 13,200 holders:
Code:
min max avg #ppl tot.xmr
17
16 100 000 - 215 443 142 600 1,2 165 745
15 46 416 - 100 000 66 189 2,5 165 745
14 21 544 - 46 416 30 722 5,4 165 745
13 10 000 - 21 544 14 260 12 165 745
12 4 642 - 10 000 6 619 25 165 745
11 2 154 - 4 642 3 072 54 165 745
10 1 000 - 2 154 1 426 116 165 745
9 464 - 1 000 662 291 192 329
8 215 - 464 307 726 223 179
7 100 - 215 143 1 816 258 976
6 46 - 100 66 3 632 240 412
5 22 - 46 31 3 632 111 589
4 10 - 22 14 1 816 25 898
3 4,6 - 10,0 6,6 726 4 808
2 2,2 - 4,6 3,1 291 893
1 1,0 - 2,2 1,4 87 124

Largest holdings:
1. 137,000 XMR
2. 80,000 XMR
3. 65,000 XMR
4. 50,000 XMR

top holding:  137,000 XMR
top 10:  20,500 XMR
top 100:  2,150   XMR
top 1000:  270 XMR
      
# of holders: 13,234   
avg holding:  167 XMR
==  0.75 BTC
==  473   USD
median holding: 46 XMR   
half of the coins belong to 150 people.

The big differences in the scenarios are:
- possible presence of a megaholder
- total number of holders

I lean towards the interpretation that this scenario is more realistic. It is already possible to buy XMR from several exchanges, and the $500 average holding seems realistic for an altcoin. (Bitcoin's average holding is about $8000). Also for somebody to have been amassed 280,000 coins, that could only have happened as a rather static percentage of the new inflation (there has been no way to generate or buy them for cheaper in such a quantity - Bitcoin did have this window open for Satoshi but Monero hasn't had it, and will not have it). This means that his stash would have been bought at the average price of at least 0.0025, and would have cost him at least BTC700, probably even BTC1,000 or more. I don't say that it's impossible that someone has done it, I just find it more likely that there is only 1 six-figure holding, about 10 holdings that are between 20k-100k and 10 more holdings in the 10k-20k range.

So truly, now it is possible to make up if you were late from Bitcoin. Just take the 100:1 leverage (or more) Smiley I will write about the XMR:BTC ratio concept more soon! Smiley
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July 20, 2014, 02:47:02 PM
 #16

The presumed reason for the lengthy Monero emission process is to ensure a wide and fair distribution. Won't 20% of Monero owners end up with 80% of the currency, as per the Pareto principle, regardless of how long the emission process lasts? If so, then why not speed it up and get it over with? Have there been any studies of length of distribution and volume of emission that would validate the current Monero plan?
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July 20, 2014, 02:49:36 PM
 #17

Monero seems to be quite unstable. What's wrong with the price?
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July 20, 2014, 03:09:32 PM
 #18

I cannot directly help you with this analysis and appreciate what you are doing, but I have a few concerns:

I followed monero from the otc time and probably the first ten pages of the thread. AFAIK there were little to no buys over the counter with more than 10000 xmr volume. Even otc it was very hard to aquire reasonable amounts of xmr. I cannot speak for the OTC in freenode (?)/ IIRC. Maybe some powerful miners would have the possibility to get a six digit amount of xmr - but to buy them would be quite complicated.

It is probably just an educated guess but I think the group of 1000 to 10000 is underrepresentated to the cost of the group above and below. My idea is that you probably cannot use the normal distribution which is neccessary for power law, because altcoiners are probably not the perfect representative group for that - I assume this group is capped at the top.

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July 20, 2014, 03:16:40 PM
 #19

The presumed reason for the lengthy Monero emission process is to ensure a wide and fair distribution. Won't 20% of Monero owners end up with 80% of the currency, as per the Pareto principle, regardless of how long the emission process lasts? If so, then why not speed it up and get it over with? Have there been any studies of length of distribution and volume of emission that would validate the current Monero plan?

Actually the likely result is 1% owning 50% of it, as is the case in both the Case A and Case B in this thread (!). And with Bitcoin (!).

This to me is the proof that the plan is working. With <insert your favorite shitcoin here>, it is not so. And the reason is that they have wanted to do it quickly, to get all the coins, and be able to soon conduct a pump&dump. With Monero, you cannot do it.
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July 20, 2014, 03:23:53 PM
 #20



Estimates based on % hodlings of various addresses of BTC-LTC +  2 anon coins DRK-XC

XMR :
0-0.1              45%
0.1-1              4%
1-10               25%
10-100           15%
100-1K           8%
1K-10K           2%
10K-100K       1%
100K+            ~

These are rough numbers from the graph but this is address based not individual based.

I think 1-1K XMR will be the heaviest range in the future
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